Mobile App Developers Should Keep Their Apps Free: 10 Reasons Why

Mobile App Developers Should Keep Their Apps Free: 10 Reasons Why

Single Payments Do Not Produce Returning Revenue

The "one and done" app pricing model leaves little opportunity for sustained revenue. After you nab a consumer's initial 99 cents, you likely won't see another penny from them.

If You Build It, They Will Pay (Later)

Successful—and profitable—developers create free-to-download apps that users can expand or improve with in-app purchases (IAPs). After downloading a free app, consumers will pay to unlock features, such as new Candy Crush levels, or to remove advertisements, among other options. According to a recent Distimo report, 76 percent of all Apple Store revenue in the U.S. is generated from IAPs.

If Your App Isn't Free, Another One Will Be

Apple's App Store launched just under six years ago with roughly 500 apps. Today, the iPhone and iPad store features almost 1 million apps. With so many options available, consumers can find a free equivalent to nearly every mobile app you produce.

An Initial Fee Creates a Barrier Between You and Your Customer

Most potential customers won't even look in the paid-app section of the App Store.

Paid Apps Give Too Much Away

Charging a one-off price means app users get to enjoy free updates for the lifetime of the application without having to contribute anything more.

Mobile Users Try Before They Buy

"Free to try, pay to buy" is a modification of the "free 30-day trial" model that AOL pioneered in the 1990s. Consumers can try the app for free and use it for as long as they'd like, but there is a catch for using the free version, such as in-app advertisements or missing premium features. If you truly believe your app provides a unique service or top-notch experience, offer a free trial and reap the financial benefits later.

Revenue From the One-and-Done Price Model Is Hard to Gauge

Subscription-based models, on the other hand, allow you to consistently measure return on revenue. Netflix is a great example: Each month you pay $8.99 for Netflix shows on your smartphone—no more, no less. This model allows Netflix to accurately estimate future revenue.

Value-Based Revenue Is Even Harder to Gauge

Placing an initial value on your app is difficult because there is a fine line between too cheap and too expensive. Set your price too low and you gain too much market without the adequate revenue to support the product. Set your price too high and you shut potential customers out.

Mobile Users Also Buy as They Try

Similar to the "free-to-try, pay-to-buy" model, usage-based financing gives developers the opportunity to get their app in front of a large audience and then make money as users upgrade. Unlike the free trial model, which typically features a light and premium version, usage-based pricing allows developers to charge for different pieces of an app. A great example is Repix, a free photo editing app that allows users to buy extra filters, animation effects and other features.

Free Apps Simply Reach More People

According to App Annie's recent list of the top grossing iPhone apps in the U.S., nine out of 100 apps exist as purely paid apps. Thus, 91 of the top 100 apps are free to download and generate revenue through other venues.

Hitting the charts—let alone topping them—on Apple's App Store is no easy accomplishment. In fact, only 2 percent of the top 250 publishers in the App Store are considered newcomers. App developers are feeling the effects of a saturated market that features nearly 1 million mobile applications and sees the introduction of new apps—both good and bad—each day. Unfortunately, as they search for the right features to set their app apart from the crowd, many developers don't realize what might be keeping them out of the running entirely: price. While the paid-up-front app model isn't entirely dead—some app categories such as business and health continue to charge initial fees successfully and unique paid apps that target groups with specific needs may still survive—seasoned developers agree that the trend is shifting toward free apps that generate revenue other ways. eWEEK and Matthew David, chief digital strategist in the Mobile Solutions Group at Compuware Professional Services, explain the 10 reasons why mobile app developers should keep their apps free.

Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz